A Crisis of Culture in the Energy Industry

The crisis of culture is a challenge for Houston’s operating companies in the PE sector.

And without a strong and cohesive culture, companies are inviting employees to walk out the door.

For many energy companies, including oil and gas companies, manufacturers and suppliers that serve these multi-billion dollar giants, an operating company can be an easy and cost-effective way to “stand up” a business. In other words, energy companies are able to hire and acquire skills: legal, accounting, operations, drill operators, rig personnel, engineering, exploration and more.

Exploration: Retention and Long-Term growth Strategies

A company can quickly be operational – offering services to the oil and gas industry. For speculative investors, particularly offshore exploration, LNG or PE companies, this model is pervasive within the Houston economy. The business then offers its services, such as an offshore rig with the potential of producing millions (maybe billions?) in revenues over the life of the well. Special report: EY Forecasts $700B slated for energy development projects [.pdf link]
[box] “Texas is often leading the oil and gas decisions and not necessarily following other states. When they’re drafting their agreements, it’s not uncommon for (companies) to provide that Texas law should govern a dispute, even if they’re not centered in Texas. ” – Greg Meece, Partner at Thompson and Knight LLP, in the Houston Business Journal[/box]

Secure a contract for the well, or for the valves, manufactured pipes, or other key services, and the business is funded. Leadership in the C-Suite is careful to use wise financing, to establish the company with a minimum capital investment (often leasing drilling equipment for the offshore rigs, for example, and using contract labor wherever appropriate).

While this business model is found throughout the ADT (applied drilling technology) industry, there’s often a piece that’s missing.

Creating an operating company is not the same as operational excellence.

For business leaders in Houston, in the energy business, the company’s culture is as important as its offshore facilities, supplier relationships, and next bid response. Why? Because today’s skilled worker in the oil and gas industry can move quickly and easily to new opportunities. Without a cohesive and consistent culture, top employees are disenfranchised, disillusioned – and looking for a new employer. As the Houston economy continues to grow, the ability for skilled labor to move to new employers is rampant. How will your company attract and keep the brightest and best?

A few thousand dollars in salary increase, and your top employees can take your expertise “on the road”. Uh-oh. Where did your operational excellence go?

For PE companies, the challenge is in creating a cohesive company culture – a consistent and bulletproof brand for internal employees. That consistency is based on a culture of honesty, integrity and teamwork. The fundamentals of effective communication are vital to attracting and retaining the best employees.

Operational companies are built on silos, it’s the nature of the business. But leadership is about breaking through those silos, so that the whole is greater than the sum of the parts. A sum that is more than just a company’s earnings.

That branding and consistency is the key to retention of top employees. And, once those big contracts come through, maintaining an expert workforce is the cornerstone of profitability and long-term growth.

Main image courtesy of NASA HQ Photo, used under creative commons license. Post image by KM&G Morris, used under creative commons. Some rights reserved.

US National Elevator Pitch Champion. Keynote speaker. Author. Business coach for Fortune 100 companies, entrepreneurs and high-growth organizations. Married with two daughters, based in Houston, Texas USA.